EXPAT RETIREMENT PLANNING

UK Pension Transfer Service For Non-UK Residents

The Wealth Genesis and our team of financial advisers provide bespoke, independent and specialist pension transfer advice for British expats overseas.

In this guide, we will give you all the information you need to make an informed decision about your UK pension assets as you reside overseas.

If you have a defined benefit pension, you can visit our defined benefit pension transfer guide for expats here.

For more scheme specific information, you can click on your UK pension provider below to have a breakdown of your options, as well as how to optimise your UK assets as an expat:

I left the UK, what happens to my UK pensions now and how do they work?

The first thing to understand is that when you leave the UK, whether that's to work or for retirement, nothing happens to your UK pension assets. They remain invested, and stay with your existing pension provider. You do not need to make any immediate decisions, and should take time in assessing your options - pensions are often the largest assets individuals hold, and should be treated with care and heightened diligence at all times.

So, whilst your pensions remain as they are and stay invested, there are some very important factors that you need to be aware of as a UK expat. The first, and more important, is your access to a full-flexible draw-down.

Why won't my existing UK pension provider give me full-flexibility as a non-UK resident?

There are several reasons why your traditional UK pension scheme won't give you full flexibility in retirement. These include the cost of servicing a policyholder overseas, international bank transfers and increased administration, as well as regulatory issues (as a result of Brexit and the UK leaving the single market).

All of the above mean that most providers (<90%) won't give you the retirement accounts that you need to lead a stress-free, optimised and simplified retirement overseas.

What is full flexible access draw-down and why is it so important to me?

In short, full flexible access draw-down basically translates to full pension freedom and flexibility. It means that you can take your money out, as and when you wish, with zero restrictions or issues. So for example, in your first year of retirement you might take out a £20,000 income payment, then leave the remaining capital to grow for a few years until you need more money - alternatively, you can take a monthly draw-down and change the amount whenever you want, or even take no money at all and leave the funds to grow - the choice is completely yours, and we feel this is the most important aspect of any UK pension account.

If they won't give me full flexibility in my international retirement, what will they do with my money?

Option 1 : Take the whole amount as a lump sum

Whilst this might initially sound exciting, normally this will be a nightmare scenario from a tax perspective. With all UK pensions, you are entitled to a 25% tax free cash payment (tax-free in the UK, not necessarily elsewhere). The remaining 75% is taxed at your marginal rate of income. So for example, if you have a pension worth £500,000, you can take £125,000 free of UK taxation and the remaining £375,000 will be taxed at your marginal rate of income tax depending on where you are resident and the regulations in that country. Such a large amount will likely put you in the highest tax bracket in most jurisdictions, so it's certainly not a tax-efficient strategy of managing your pensions as an expat.

Not only is this not tax-efficient, but it also means your retirement pot is no longer invested, meaning you might lose out on long-term capital growth as you enter your golden years.

Option 2: Purchase an annuity from your provider

The second option they will give you is to purchase an annuity from them. This means giving over the entirety of your pension in exchange for a guaranteed income for your lifetime. Annuity rates are currently not very attractive, as well as very inflexible. Whilst this may be a good plan for very cautious investors, typically it is not the optimal retirement strategy for expatriates.

I want flexible access as a non-UK resident, what are my options?

There are currently only 2 options available to British expats looking for full benefits with their UK pensions overseas:

01

Qualifying Recognised Overseas Pension Scheme (QROPS):

This type of pension scheme physically removes your UK pension outside of the UK and to another jurisdiction, normally Malta or Gibraltar. Whilst these used to be very common overseas pension vehicles for expats, that is no longer the case.

Firstly, following the Labour budget in 2024, transferring to a QROPS will result in the overseas transfer charge (25% tax penalty) being applied, unless you live in the same jurisdiction as your QROPS account. Given the overwhelming majority of QROPS are held in Malta and Gibraltar, this means that unless you live there you will be charged 25% of your pension savings to move to a QROPS.

Even if you did live in the same place as where your QROPS is held, we still do not advise clients to look at these schemes. QROPS are famously very expensive to run (often close to 2% per annum in running costs), as well as being less regulated than standard UK pensions (you no longer have the protection of the FCA when you are invested in a QROPS pension).

02

International SIPP (Non-Resident SIPP):

The International SIPP represents the best choice for the majority of expats looking to take control of their retirement assets after leaving the UK. This type of pension is still based in the UK, and still covered by the Financial Services Compensation Scheme (FSCS) and regulated by the FCA, but it is specifically built for non-UK residents.

By being tailor-made to the international retiree, transferring and consolidating your UK pensions into an International SIPP provides a wide-range of benefits, notably:

  1. Full control of income (flexible access in retirement and full freedom on withdrawals).

  2. Multi-currency options, allowing individuals to hedge against currency risk in their international retirement.

  3. International bank transfers, meaning your SIPP account can pay into any bank account in the world, as long as it's in your name.

  4. Wide range of investment choice, from popular fund managers such as Vanguard, Blackrock, Fidelity etc.

  5. Access to professional advice and an internationally regulated financial adviser.

For a full-breakdown of the benefits of an International SIPP, see our SIPP page here.

Can I consolidate all my UK pensions into an International SIPP account?

Yes, it is possible to consolidate all of your existing UK pensions into one International SIPP account. This simplifies your retirement and investment strategy, providing a greater peace of mind in retirement.

How much does it cost to transfer my UK pension abroad, or transfer my pensions to an International SIPP account?

The cost of a pension transfer, as well as the ongoing cost of regulated financial advice varies from firm to firm. The majority of expat financial advisers will charge a percentage based on the value of your UK pensions - this is typically between 5% and 1%. They will then charge an annual management fee for looking after your pensions and the investments, which is usually 1%.

At The Wealth Genesis, we do things differently.

We charge all our clients the same flat UK pension transfer fee of £3,000, regardless of the number of pensions being consolidated, or the total value of the pensions. Our fee is only due upon completion, and can be deducted from your pension pot if preferable.

We charge an industry leading management fee of 0.85% per annum. To understand more about our forward-thinking and client-centric fee structure, see our fee page here.

UK Pension Transfer Service For British Expats

The Wealth Genesis is the leading international provider for UK pension transfers. Our complete independence and zero-commission structure ensures that we only work in our client's best interests.

All our advisers hold at least 10 years of experience in senior positions, and are qualified to the highest standards to ensure the best advice to our clientele.

To schedule an initial consultation and discover how we can help optimise your retirement abroad, use the diary below.